Taxation in Canada

Taxation in Canada is a shared responsibility between the federal government and the various provincial and territorial legislatures. Under the Constitution Act, 1867, taxation powers are vested in the Parliament of Canada under s. 91(3) for:

3. The raising of Money by any Mode or System of Taxation.

The provincial legislatures have a more restricted authority under ss. 92(2) and 92(9) for:

2. Direct Taxation within the Province in order to the raising of a Revenue for Provincial Purposes.

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9. Shop, Saloon, Tavern, Auctioneer, and other Licences in order to the raising of a Revenue for Provincial, Local, or Municipal Purposes.

In turn, the provincial legislatures have authorized municipal councils to levy specific types of direct tax, such as property tax.

The powers of taxation are circumscribed by ss. 53 and 54 (both extended to the provinces by s. 90), and 125, which state:

53. Bills for appropriating any Part of the Public Revenue, or for imposing any Tax or Impost, shall originate in the House of Commons.

54. It shall not be lawful for the House of Commons to adopt or pass any Vote, Resolution, Address, or Bill for the Appropriation of any Part of the Public Revenue, or of any Tax or Impost, to any Purpose that has not been first recommended to that House by Message of the Governor General in the Session in which such Vote, Resolution, Address, or Bill is proposed.

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125. No Lands or Property belonging to Canada or any Province shall be liable to Taxation.

Since the 1930 Supreme Court of Canada ruling in Lawson v. Interior Tree Fruit and Vegetables Committee of Direction, taxation is held to consist of the following characteristics:

In order for a tax to be validly imposed, it must meet the requirements of s. 53 of the Constitution Act, 1867, but the authority for such imposition may be delegated within certain limits. Major J noted in Re Eurig Estate:

In my view, the rationale underlying s. 53 is somewhat broader. The provision codifies the principle of no taxation without representation, by requiring any bill that imposes a tax to originate with the legislature. My interpretation of s. 53 does not prohibit Parliament or the legislatures from vesting any control over the details and mechanism of taxation in statutory delegates such as the Lieutenant Governor in Council. Rather, it prohibits not only the Senate, but also any other body other than the directly elected legislature, from imposing a tax on its own accord.

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